PRESS BRIEFING
BY
GOVERNOR WAIHEE OF HAWAII AND
SMALL BUSINESS ADMINISTRATOR ERSKINE BOWLES
The Briefing Room

11:53 A.M. EDT

MS. MYERS: The following briefing will focus on the
State of Hawaii and the success they have had there in moving toward
universal coverage. We will have with us Governor Waihee and
Administrator Erskine Bowles from the Small Business Administration.
Now, the Governor has to leave in about 15 minutes, so, they'll each
make opening statements and then be happy to take your questions.

GOVERNOR WAIHEE: Thank you, Dee Dee. It's been a
pleasure this morning to be able to spend some time with the meeting
here in Washington and with the President talking about the Hawaii
health care system. You know, in Hawaii we're doing what the
President hopes to achieve nationally. We have a system designed to
provide 100 percent universal health care coverage, and we are
covering approximately 96 to 98 percent of our people.

Now, the Hawaii system can be characterized as a 20-year
demonstration project demonstrating the effectiveness of an employer
mandate. This demonstration project has proven that it is possible
to have quality health care at lower costs while minimizing cost
shifting and keeping a healthy business climate. Just take the four
points individually.

First, quality care. Universal coverage and a focus on
primary and preventive care means Hawaii residents get earlier
medical treatment. And, as a result, we can demonstrate some very
outstanding health statistics. We have the same instances of cancer,
heart disease and diabetes as the rest of the nation, for instance,
but among the lowest morbidity rates in the nation for these same
conditions. We have higher rates for tuberculosis and smoking, but
the morbidity rate that is one half the national average.

And, second, lower costs. Universal coverage and
primary care means less hospital and emergency utilization, indeed,
those rank about one-third of the national average. In 1974 the cost
of employee health insurance for typical Hawaii business was about
the same as the cost for its California counterpart. Today our
businesses pay about 60 percent of what their California counterparts
pay. Our health share of our state gross product is about eight
percent compared to the national average of 14 percent.

Third, universal coverage minimizes cost shifting. The
fact that all our employers must be means that a business that
provides insurance isn't subsidizing a business that doesn't, and as
a result, our uncompensated hospital care is below the national
average, and obviously this lowers cost as well.

Fourth, universal coverage in Hawaii supports a healthy
business climate. A level playing field is critical; I cannot
overemphasize that point. An employer mandate means that everybody
pays their fair share and shares in the benefits equally. Now, the
total cost of doing business and the cost of living in Hawaii is
high. And as I indicated, it's about 39 percent above the national
average. Now that's a statistic a governor would select. There are
others that use a little higher statistics.

So you would think that our health care insurance costs
and out-of-pocket costs should also be higher than the national
average. In fact, they are about 30 to 50 percent lower for
businesses in Hawaii. Now, over the past 20 years Hawaii has enjoyed
a steady rate of positive business growth from 18,000 employees in
1974 when the employer mandate began to something approximately
27,000 in 1993. In 1993, by the way, which is the year after
Hurricane Iniki and in a year when our economy was slowed
considerably, our business failure was less than one-half of the
national average. And it's consistently been this way.

The final point is that for the past 20 years I think we
have demonstrated that an employer mandate works well; indeed, the
businesses in Hawaii, the small businesses in Hawaii in a recent
survey have indicated that 82 percent are very satisfied with the
results of the employer mandate. We would like to have -- the most
astonishing thing of all, though, is the fact that in Hawaii the
whole health care controversy is no big deal. We would like to see
the rest of the country have the same kind of benefits that we enjoy.

Now, I am here, though, to say that we are extremely
aggravated by the misinformation and the like that is being spread
about the Hawaii system, the mischaracterization of the Hawaii
employer mandate, and we would like very much to clear that up.

Director Bowles is here from the Small Business
Administration, and he would like to, I guess, continue this
conversation.

ADMINISTRATOR BOWLES: Thank you, Governor. Well, as
most of you all know who have watched me for sometime, I have been
traveling throughout the country, meeting with the owners of small
businesses. I have now literally met with thousands of small
business owners throughout the country. And I have heard the outcry
of these small businesses for real health care reform. And there's
little question why they cry for real health care reform. Don't
forget these are the people who are experiencing annual increases in
the cost of health care of 10 percent to 50 percent a year, who have
absolutely poor coverage today, who are subjected to every abuse in
the health care system and have no market muscle now to bring down
the cost of health care.

And as I have traveled throughout the country from state
to state, I have looked for states that would serve as a good model
to go forward. And, clearly, since 1974, Hawaii has had real health
care reform; they have been in the forefront of this effort. And,
don't forget, 94 percent of the businesses in Hawaii are small. And
of that, 82 percent of those small businesses -- 82 percent -- are
satisfied with the way the employer mandate works in Hawaii. And let
me tell you why. The Governor touched on some of these subjects.

Hawaii does have one of the highest costs of living.
The number he used, it's 39 percent above the national average. But
it does have one of the lowest costs of health care; health care
costs of 30 percent below the national average. Health care premiums
in Hawaii are a fraction of what they are in other states.

Let me give you one example. A standard Blue
Shield/Blue Cross plan in Hawaii is somewhere between 114 percent and
200 percent less than that same identical plan is in Kansas where we
have somebody else who's talking about health care reform now, this
same policy. Business failures in Hawaii are less than half the
national average and business creation among small businesses has
been extraordinarily high, growing at over 200 percent. I think the
number the Governor used a few minutes ago was there was about 18,000
employers back in 1974; there are 27,000 now.

And, in addition, they set up a rainy-day fund out in
Hawaii to protect that little small business we all hear about who
just flat couldn't afford health care coverage. Well, I want to tell
you how many times that rainy-day fund has been used in Hawaii. It's
been used five times in 20 years for a total of $85,000 -- five
times. And I think, for sure, there's no question that the State of
Hawaii has also had good experience from real health care reform.
Hawaii spends 8.1 percent of its state GDP on health care. The
national average is 11.1 percent, 37 percent more. The uninsured in
Hawaii has gone from 17 percent before the employer mandate was put
in down to four percent today. And that's why the national average
has been going the opposite way and we're now at over 15 percent.

And, I guess the thing that bothers me the most is that
when I talk to reporters, you always ask me and I read in the papers,
you know, why don't more small businesses support real health care
reform, you know, universal coverage and shared responsibility? And
I always say they do and I cite the 626,000 small businesses that
came here to the White House to meet with the President to say they
were for universal coverage and shared responsibility.

I talk about the new Wayne State University report that
looked at businesses of less than 50 employees, which said for those
of one to 50, approximately 42 percent favor an employer mandate, 46
percent are against it, so, roughly even. But when you go from 26 to
50, 56 percent favor an employer mandate and 36 percent are opposed.
And I've always said I think the reason why more aren't more vocal is
there's just so much plain misinformation out there. The Governor
and I talked yesterday, and I showed him a release from a trade
organization, and I just want to read you a couple of things that
this trade organization lists as facts about the Hawaii plan.

Q What trade organization is it?

ADMINISTRATOR BOWLES: It's the NFIB, Brit.

Q That's a small business group, is it?

ADMINISTRATOR BOWLES: I think it is, yes.

Q Are they putting out misinformation or they
infected with it?

ADMINISTRATOR BOWLES: Let me read this to you and you
make a decision, okay.

Here it says that, "It is significant that Hawaii led
the nation in job loss in 1993. In 1992 the number of business
failures in that state increased by 290 percent." Now, one of the
facts they leave out was that 1992 they had something called a
hurricane, Hurricane Iniki, that devastated the small business
populace in Hawaii in 1992 and carried forward into 1993.

But still with Hurricane Iniki, the business failure
rate in Hawaii was below the national average, and the trend in it
has been less than half the national average each and every year, and
job creation, as the Governor said, has steadily been going up, going
from 18,000 employers too 27,000 employers. This same report says
that the state health insurance programship was failed, that it was
dissolved. It didn't fail. It wasn't dissolved. It was merged into
a private plan, a managed care program. It says here that 90 percent
of Hawaiians --

GOVERNOR WAIHEE: I think that's one of the -- just
characteristic of the kind of misinformation that the NFIB has put
out there. I was so outraged when I read that. The program that was
a success, and in fact laid the foundation for universal coverage in
Hawaii, and did so well that it was merged as the result of a waiver
that we got from the Clinton administration that allowed us to
further improve our system would then be characterized as a failure.
I mean it's just absolutely contrary to the fact.

ADMINISTRATOR BOWLES: Let me give you a few more of
these facts. It says that 90 percent of Hawaiians were covered prior
to the enactment of the employer mandate. They had 17 percent
uninsured. They now have four percent since then. It says here that
the cost continued to grow. Costs are up. But what it fails to say
is that the cost for the small business populace which we are
addressing have grown at a much, much slower rate than they have
throughout the nation. And, in fact, the cost in Hawaii last year
for the Blue Shield/Blue Cross plan went up zero percent, and for the
HMO went up eight percent, whereas Arthur Anderson came out with a
report for National Small Business United just this week where it
said that the cost for small business owners everywhere else was up
14 percent last year. But it was really up more than that, because
the copays were increased, the deductibles were increased, and the
benefits were reduced.

Hawaii's small businesses pay $400, almost $400 less
today, a year, than the average small business. That's almost 30
percent less. In 1974, Hawaii's small businesses paid the same as
their counterparts in California; today, they pay between 50 percent
and 90 percent less. The last fact in here says that, gosh, there
were serious consequences for businesses according to our Kaiser
Foundation report. I think I have debunked most of that, but I will
remind you one additional fact that's not mentioned, that that is
what the Governor said. Eighty-two percent of those businesses are
satisfied with how employer mandates work in the State of Hawaii.

GOVERNOR WAIHEE: I think the bottom line is that the
employer mandates work, the employer mandate works, and Hawaii
supports universal coverage for the nation.

ADMINISTRATOR BOWLES: And I think we've seen that
businesses thrive, that jobs are not lost, and that premiums are
lower for everyone.

Q Governor, when you look at the bills that are now
on the Hill, what bill is closest to what you have in Hawaii?

GOVERNOR WAIHEE: They both have elements of what we
have in Hawaii, and they both include the employer mandate. There's
a more direct employer mandate, I think, in the House bill than in
the Senate bill. However, I think the intention -- the intention is
to have universal coverage.

Now, as much as I support the employer mandate, I'd be
the last to say that that is the only possible way that you can
achieve universal coverage for the nation. I just don't know of
another much less better way to do it because it builds on the
existing system.

If there is another way to do it, so be it. But the
important thing is that we have universal coverage. Now, in 1974,
when Hawaii implemented its employer mandate, all of the arguments
that we now hear nationally about the concerns regarding that mandate
were made back then. Our experience demonstrates that those concerns
were misplaced.

We think, 20 years later, we should have disposed of
those same kinds of concerns. So this is like deja vu for us.
What's important, though, is that we have universal coverage. Now,
Hawaii did it overnight, essentially a year later after the debates
began. I think that the process being outlined nationally, where
there's a target date for movement on universal coverage, when there
is a phase-in period, when there is support for small businesses,
something that we didn't have in our plan to begin with, and the
like, should make the transition even better for the national plan.

Q Governor, states, I believe, usually look at other
states for new ways of doing things to see what works somewhere else,
and maybe try and adopt that or consider that. If Hawaii's program
has been successful as you've claimed and as the administration has
claimed, why do you think they're the only state in the country after
a 20-year demonstration project that has it that way?

GOVERNOR WAIHEE: Because we don't have national health
care reform. Let me be specific about that. Hawaii is the only
state in the nation that has an ARISA exemption that allows us to
have an employer mandate. In fact, one of the reasons why we support
national health care reform is that after 20 years, we have
discovered that there are things that we would like to improve with
our system, but are unable to do so because that particular waiver
freezes us into our 1974 framework. So universal health care
coverage and reform for the nation is also important for Hawaii, not
only as a model for other states, but also so that we can grow and
expand.

Q You're not suggesting, are you, that other states
have tried to get this exemption but have failed?

GOVERNOR WAIHEE: Yes. That's a fact. No other state
has the exemption. So, no other state has been able to do what
Hawaii did. What is necessary would be either a state by state
system of exemptions, which I don't think would be practical or
possible, or some kind of national health care plan that achieves the
objectives that Hawaii set out to achieve back in 1974. You
understand, we passed our plan before there was any thought about the
need for an ARISA waiver. And six years after we passed our plan the
Supreme Court ruled that we had to have a waiver, so we went back and
got it.

Q You talked about small business support. How do
you explain the growing disenchantment among your larger employers,
particularly the big three auto makers on health care reform this
year?

GOVERNOR WAIHEE: Personally, I think it's part of the
process. You know, those of us that work in the Executive Branch of
government at least on the state level know that we generally set out
a direction, we set out a goal, we set out some proposals, and the
people who actually implement it are the legislators. And the
legislative process is an animal that has a certain rhythm to its
lifestyle. And, generally speaking, right about this time people are
disappointed about specifics and really what they ought to do is get
in there and work it out, as they always do, in the legislative
process.

Now, my thing to businesses in general, small business
and large business as well, is that our experience has demonstrated
that when you level the playing field costs to businesses that are
now providing insurance, particularly in America large businesses, go
down. That they are now paying for everybody else. So, if that
objective can at least be achieved in any kind of health care reform,
they'd come out ahead with this debate.

ADMINISTRATOR BOWLES: I would just add to that, that I
read the papers this morning, too. There must have been an event
that was here yesterday that was missed. I thought I saw yesterday
that we had the CEOs from Archer Daniels, Shell Oil, Eastman Kodak,
Unilever, Warner Lambert, Monsanto, American Express, Texas
Instruments, Chemical Bank, Chase Manhattan come here to say that
they were for universal coverage, that they supported shared
responsibility, and that they represented several hundred big
businesses who were represented, I think, somewhere about a 100
million people that said they were for universal coverage for real
health care reform. Yet, I didn't read anywhere today about that big
business support for the health care plan.

Q My question is for those companies that originally
had expressed support and now seem to have second thoughts about it.

ADMINISTRATOR BOWLES: I'm confident that as this plan,
as Senator Mitchell said, as this plan goes through the legislative
process, that he's going to be listening to the concerns and ideas of
big and small businesses and try to make improvements on the plan. I
think he said that on the floor last night.

Q Mr. Bowles, despite that event yesterday, though,
the President today said, urged the business community to "get in
there with both feet." First, because we couldn't have a camera in
there, would you mind summarizing his remarks for us for the cameras,
a; and b, if the support is so strong as you say, why did he have to
make a plea today to get the business community involved?

ADMINISTRATOR BOWLES: First of all, I don't think I'd
ever try to summarize anything the President said, number one.
Number two, I think when he, if he said -- those were the words he
used, I think as I understand what he was trying to say is that
oftentimes people who are for something are never quite as active as
those who are against it.

You know, again, we brought 626,000 representatives of
small business owners here to Washington to say they were for
universal coverage, that they were for shared responsibility, that
they believed in building upon our present system of private sector
health care, building upon our present system of employer-based
coverage. I didn't read a thing about it. But yet I hear about the
610,000-member NFIB all the time. One's got 626,000 members; one's
got 610,000, you know, but yet one seems to get a lot more press. I
think the people who are for it need to get more active. That's my
opinion.

GOVERNOR WAIHEE: One of the disadvantages of being from
Hawaii -- well, one of the advantages of being from Hawaii is I get
to return. Thank you very much. (Laughter.)